ECONOMIC IMPERIALISM. The term imperialismis generally used to mean foreign control of assets and de-cisions, including where such control exists in fact but notin law. Empire may be “formal” or “informal” (Gallagherand Robinson, 1953), “colonial” or “neocolonial” (in theterminology of dependency theory). This essay considerseconomic causes and effects of imperialism.

There is a long and geographically widespread history ofrulers using force to enhance their fiscal and military po-tential by appropriating territory, subjects, or tribute fromtheir neighbors. The literature on “economic imperial-ism,” however, mainly concerns the last five hundredyears. Its focus has been the causal relationships betweenthe political and economic expansion of western Europeoverseas and the consequences of European expansion forthe economies of the rest of the world. This requiresbroadening, in recognition that the expansionary process-es that emanated from Europe were extended, mainly bysocieties which themselves stemmed from earlier phasesin these processes, such as the United States and Australia,but also by others on which Western imperialism had im-pacted from outside, notably Japan.

Types and Periods. Imperialism has taken diverseforms, often historically interrelated. But it is reasonableto make a basic distinction between the wholesale appro-priation of territory, involving the demographic and politi-cal displacement of any previous occupants, and controlover societies that, however reshaped, remained in occu-pation of much or all of the land.

Territorial appropriation and demographic displace-ment have occurred widely and recurrently, but in globalterms the major example is the conquest and settlement,by west Europeans and people predominantly descendedfrom them, of three already inhabited continents plus thepreviously uninhabited one, Antarctica. This process, be-gun with Columbus’s arrival in the New World in 1492, wasnot essentially completed in North America and Australa-sia until the late nineteenth century. In South America inparts of the Amazon Basin, it was not quite finished by2000. In the majority of these territories, the new societies,dominated by settlers or by Creole elites, won independ-ence (for example, the United States, the republics of LatinAmerica). Those British colonies of settlement establishedlate enough for the imperial power to avoid the U.S. out-come became self-governing while retaining constitution-al and political links with the “mother country.” Haiti wasan exception—a state created not by settlers but by a revo-lution (in the 1790s) of African slaves who had been im-ported to work the Europeans plantations.

Imperialism without anything approaching a demo-graphic takeover also has an ancient and geographicallywidespread history, as when states were forced to pay trib-ute to foreign rulers. But in the context of the “economic

imperialism” literature, two main subcategories may beidentified.

One is informal: the use of force to secure or open for-eign markets. This applies to the establishment by thePortuguese (from the fifteenth century), then (from theseventeenth century) by the Dutch, French, and English,of armed seaborne trading networks, with supportingshore bases, along much of the coasts of Africa and Asia.Naval power was used where possible to establish com-mercial hegemony over the existing Asiatic networks;characteristically, in each national case, a royal or char-tered company monopoly was formed to export goods toEurope, while European company employees were per-mitted freely to engage in intra-Asian trade. The notion of“informal empire” also applies, conversely, to what Gal-lagher and Robinson called the “imperialism of freetrade”: the use of military and political pressure to coercecountries that were politically weaker and seemingly lesscompetitive economically into opening their markets toforeign goods. The main era of this campaign was the mid-nineteenth century. It was practiced, arguably, by theBritish in Latin America and most especially in East Asia.Notable examples are the Opium Wars (1839–1842,1858–1860), fought by Great Britain partly to oblige Chinato allow unrestricted imports of the drug from British In-dia, and U.S. Commodore Matthew Perry’s dictation toJapan in 1854 of an end to its self-imposed commercialisolation from the West.

The “formal” variant of imperialism without demo-graphic takeover was colonial rule over predominantly in-digenous populations. The main period of this may be dat-ed from the British East India Company’s establishment ofcontrol over the land revenue of Bengal in 1765. The trendwas at its most intense in the late nineteenth century, whentropical Africa and much of Southeast Asia were parti-tioned among European powers. In the twentieth century,the process was braked, not only by lack of remaining op-portunities, and in some cases by the emergence of power-ful independence movements, but also by changing opin-ions in the imperial legislatures and in internationalgatherings. Thus, when Germany’s colonies, plus the Arabprovinces of the former Ottoman Empire, were divided be-tween the victors of World War I, they were held on man-date from a new kind of international organization, theLeague of Nations. The sense that the appropriation ofalien territory was increasingly regarded as illegitimatewas signaled in the 1930s by the widespread internationaldenunciation, by public opinion as well as governments—including Western imperialist countries—of the Italianand Japanese invasions of Ethiopia and China, respective-ly. Even so, the overwhelming consensus in the imperialpolities was still that empire, as such, was morally accept-able and would endure. Yet, the west European retreat

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from colonies came relatively precipitately after 1945,most colonies gaining independence within twenty years,and was virtually complete by 2000.

Finally, it is important to note that the basic distinctiondrawn in this section is an analytical construct: the historywas often less clear-cut, especially in Latin America andAfrica. In much of what became Latin America, demo-graphic displacement went beyond what the colonists hadoriginally intended, while in certain cases that displace-ment was limited. The Spanish colonists initially intendedto extract labor and tax from the local populations andpolities they encountered; the rapid shrinking of indige-nous populations went far beyond any military plans. Con-versely, in some countries Native American numbers part-ly recovered in the seventeenth and eighteenth centuries.In Africa, certain colonies were envisaged as settler do-mains. But, in contrast to North America and Australia,settler economies always depended on African labor; andwhile the majority of the land was generally appropriatedfor white use, a portion was designated to be left in Africanhands with the intention that retired and future laborerswould be fed by subsistence farming. Even in the countrywith the largest proportion of whites, South Africa, the vastmajority of the population was always of African descent.In that sense, the “settler” economies ultimately belongedin the category of colonization without total displacement.

Theories of Economic Imperialism. The most influ-ential economic theories of the causes and effects of im-perialism all relate imperialism to the development of acapitalist-led world economy. Despite notable liberal con-tributions, the major tradition of theoretical writings on“economic imperialism” has been the Marxist-dependencyone, against which critics such as Gallagher and Robinsonhave reacted. For Marx, imperialism was a form of “primi-tive accumulation,” the use of a mixture of coercive andmarket methods to acquire resources that could be rein-vested in the process of creating an advanced capitalisteconomy. It thus contributed to economic development inthe imperial economies themselves. Yet, writing on BritishIndia, Marx took a paradoxically optimistic view of the im-pact of industrial-capitalist imperialism on less advancedeconomies. Colonialism was exploitative and brutal, butthe logic of capitalist development ultimately accepted nofrontiers. Motivated by the search for profit and propelledby competition among themselves, capitalist firms and thegovernments that (he argued) represented them would de-stroy precapitalist indigenous institutions (for example, inland tenure) and replace them with capitalist arrange-ments. Again, in pursuit of profit, they would introducethe most advanced transport technology available: in thenineteenth century, the steam railway. Greedy and initiallydestructive as the colonial rulers and firms would be, theultimate result would be to advance India from what he

considered a stagnant form of precapitalist economy on toa capitalist path of development.

A powerful development of the first half of Marx’s analy-sis was provided by the West Indian historian Eric Williams.In Capitalism and Slavery (1944), Williams put forward thethesis that the Atlantic slave trade and plantation slaveryin the New World provided reinvestable profits and cheapraw cotton on a scale essential for the British IndustrialRevolution.

Dependency-theory writers broadly accepted the firsthalf of Marx’s analysis—and the Williams thesis—but re-jected the second. They argued that the same process thatbrought development to the homelands of capitalism andto North America and Australasia simultaneously brought“underdevelopment” to the rest of the colonized world,trapping previously autonomous societies in poverty thatwas self-perpetuating because any significant profits madein them was extracted by Western firms or rulers (Frank,1978). An important feature of dependency theory was theproposition that the end of colonialism was apparentrather than real, “decolonization” being really a transitionto “neocolonialism,” in which foreign capital continued toexploit the local population but with protection from a lo-cal client-state rather than from European officials. Thisanalysis was built upon in left-wing critiques of U.S. gov-ernment policy as well as of transnational corporations(Magdoff, 1969). Immanuel Wallerstein, in his The ModernWorld-System (1974, 1980, and 1989), which covers around1500–1840, and elsewhere (The Capitalist World Economy,1979) elaborated from the classic “dependency” argumentin his own “world system” framework. This, however, en-visaged some scope for upward economic mobility for un-derdeveloped countries. This provided some recognitionof a reality that was then becoming increasingly clear: thatindustrialization was underway in formerly “underdevel-oped” countries of East Asia in the 1960s to 1980s, whilethere had also been long-term growth of manufacturing incertain other parts of the third world, most notably Brazil.The economist Fernando Cardoso and others argued that,contrary to early dependency theory, dependent develop-ment was not a contradiction in terms but an accurate de-scription of the dynamics of the Brazilian economy in thelate twentieth century: an economy driven by a triple al-liance of the national government, local capitalists (thejunior partner), and foreign capitalists, the latter beingmainly U.S. transnational corporations (Cardoso andFaletto, 1979). Meanwhile, Marx’s “optimistic” (if alsotragic) view of the consequences of imperialism for its vic-tims was updated and restated, in a formidable polemicagainst dependency theory, by Bill Warren (Sender, 1980).

If Marxist and dependency writers have provided themost striking theories of the economic effects of imperial-ism, liberal writers have offered more on the motives and

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mechanisms of territorial and other forms of imperialism.Admittedly, Lenin made a much-cited contribution, Impe-rialism: The Highest Stage of Capitalism (1916 and 1942).But, written during World War I, this was primarily in-tended to explain the internecine aggression of industrial-ized capitalist states as the final stage of capitalism. He ar-gued that in those countries in which capitalism was mostadvanced, the endeavor to sustain the rate of return on in-vestment had led to the formation of monopolistic firms inthe home market, who correspondingly encouraged theirgovernments to use force to secure markets and raw mate-rials abroad. Much of the inspiration for Lenin’s formula-tion came from a liberal free trader, J. A. Hobson, whoseclassic Imperialism: A Study (1902, revised 1905, 1938) wasa critique of what he saw as the economic interests behindGreat Britain’s recent pursuit of war with the Afrikaner re-publics. I will discuss how these theories have fared in thelight of subsequent historical research.

Economic Causes of Empire. It is important to notethree preliminary complications. First, the issue of eco-nomic elements in the causes of imperialism is a matternot only of the aims of the empire but also of its net costs.The latter affected the capacity of states to conduct imperi-alism even when the motivation for empire was noneco-nomic. Second, analysis of the motives for an empire hasto take account of the fact that, almost always, more thanone level of decision taking was involved. Just as Colum-bus needed a sponsor before he could sail, annexationswere often authorized in the imperial capital “in response”to an initiative by a local commander or official. Converse-ly, much might depend on how the “man on the spot” inter-preted his instructions, which had to be implemented aftersubstantial delay (given the limits of communication tech-nology in the period concerned) in an often unpredictablesetting. Third, any satisfactory explanation of an annexa-tion, for instance, must be structured: there were permis-sive and facilitating conditions as well as proximate caus-es. These complications help explain why analyses of thecauses of specific imperial acquisitions or retentions oftenseem inconclusive. This rest of this section is organized inthree parts. One enlarges on the methodological issues.The second reviews economic motives in the differentforms and phases of imperialism outlined earlier, relatingthem to the evolution of economic development in a globalcontext. The third comments on the changing costs ofempire.

Analysis of motivation: methodological considera-tions. What kinds of economic motives have contributedto the acquisition and maintenance of empires, and howimportant were they compared to noneconomic motives?The following observations should be made.

A frequent motif in the historiography is the argumentthat the annexation of a particular place was determined

on the spot rather than in the metropole. Logically, howev-er, “peripheral” explanations can never be sufficient be-cause, by definition, the local representatives of an imperi-al power could be overruled. Therefore, an adequateanalysis must account for the different attitudes ofEuropean governments toward the enthusiastic aggres-sion of subordinates on the ground.

A common objection to economic explanations of met-ropolitan manifestations of imperial expansionism is thatthe prospective colony concerned accounted for only asmall percentage of the prospective colonizer’s overalltrade and investment. This argument fails on marginalistlogic. In economic terms, the question was surely whetherthe incremental cost of annexation compared with nonan-nexation was expected to be exceeded by the incrementalbenefits from trade and investment in the territory if it wascolonized, compared to if it was not. Thus, the most signif-icant aspect of the share of trade with Africa in the overallforeign trade of Great Britain, France, and Portugal in1875, virtually on the eve of the “scramble for Africa,” wasnot that it was small, but rather that it became muchgreater after the establishment of colonial rule (see Table 1).

Equally, that a territory’s economic involvement with aparticular European economy should have increased afterannexation does not prove that this was the aim of annexa-tion. Trade and investment could follow the flag even whenthe flag was imposed from noneconomic motives. The factthat the area was now a colony presumably reduced trans-action costs for firms from the colonizing country. Mean-while, the new colonial administration needed to justify itsexistence by trying to attract investment and by raising taxrevenue—which was most easily obtainable via greateroutput for the market, and especially for export.

Finally, to resolve issues of motivation it is helpful to beable to examine the unpublished papers of the decisionmakers. Even so, care must be taken to check for consis-tency of purpose. If a private company wanted an imperialgovernment to annex the country with which it was trad-ing, it was in its interests to use whatever arguments it con-sidered most likely to sway the decision—whether or not

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TABLE 1. Share of Trade with Sub-Saharan Africa in TotalTrade of Great Britain, France, and Portugal, 1875–1920(selected years)

EXPORTS (IMPORTS) 1875 1890 1905* 1920

Great Britain 2.9 (2.6) 4.3 (3.5) 8.3 (6.9) 6.7 (6.6)France 1.5 (1.2) 0.8 (1.4) 0.5 (0.8) 2.0 (3.4)Portugal 5.0 (2.5) 6.0 (2.5) 15.0 (3.5) 13.0 (4.5)

*In the British case, 1906.SOURCE: Austen Ralph. African Economic History, pp. 277–278. Lon-don, 1987.

those arguments represented its own priorities. Converse-ly, a government that decided on an annexation for, say,political reasons might well have a political interest inallowing those who had petitioned for the annexationon commercial grounds to believe that the decision wasspecifically a favor to the petitioners.

Economic aims in imperialism. It would be unrealis-tic to expect to find a consistent set of aims for imperial-ism, even when the inquiry is “limited” to half a millenni-um of mainly Western domination. The noneconomicmotives varied with cultural and political context. Thus ifmilitant Christianity did much to inspire Iberian colonistsin the New World, this hardly applies—certainly not in thesame way—to the Dutch and English trading companies inthe seventeenth and eighteenth centuries and is irrelevantto the French colonial annexations of the late nineteenthcentury, under the strongly secular Third Republic. Again,rivalry within Europe affected the behavior of Europeanstates overseas, but in varied, even opposite, ways depend-ing on the position of the individual polity concerned. Fol-lowing the Franco-Prussian War of 1871, French govern-ments may have acquired vast spaces in Africa (from 1879)in part as perceived compensation for the loss of smallerbut more highly valued space at home. But, by definition,such reasoning cannot explain why Germany (in 1884) ac-quired four African colonies itself. Economic aims wereoften important. But they, too, varied in patterns that aremost plausibly understood as relating to the changing eco-nomic interests of the countries concerned—and especial-ly of their decision-making business and political elites—in the context of international economic relations anddevelopment.

For the Iberian pioneers of expansion beyond Europe,the search for wealth appears to have been a powerful in-centive, though it was necessarily realized in differentforms: precious metals as loot for the invaders themselves,institutionalized flows of gold and silver from mines andtaxes from Spanish America to the Spanish crown, andtrading profits (some of them monopolistic) for Por-tuguese traders. The latter was the official purpose of thechartered companies created by northwestern Europeancountries in subsequent centuries. In India, the transitionof the British East India Company from merchant to rulerof most of India (by 1818) was, at one level, a series ofpiecemeal responses to crises in or with particular indige-nous states that destabilized trading conditions (crisesthemselves partly the result of earlier British interven-tions). At a higher level of decision making, the main rea-son the East India Company directors overcame their re-luctance to accept further territorial responsibilities wasfinancial: the prospect of additional land revenue.

It seems clear that the “imperialism of free trade,” what-ever its ideological justification, was underpinned by the

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calculation that the Industrial Revolution had given GreatBritain, and then other Western producers, a competitiveedge in manufactured goods in overseas markets, notablyin Asia. This is not the full story, however: Great Britain’sexisting colonial interests in India were reflected in thename Opium Wars.

Less clear, and much disputed, are the reasons for theround of territorial annexations between 1875 and 1910.One point now established in the literature is that the Hob-son-Lenin approach is largely irrelevant. Although therewas indeed a vast outflow of capital from Great Britainand France in the period, little of it went to the countriesthat now came under colonial rule. Much stronger cases,however, have been made for the pertinence of other eco-nomic interests.

In Portugal, the least industrialized of the Europeancountries that “scrambled” for Africa, the acquisition offurther territory was seen as economically advantageous,though the economic imperialists disagreed over whetherthis advantage could be maximized by, in effect, leasingcolonial resources and markets to foreign firms or havingPortuguese companies exploit the opportunities them-selves (Clarence-Smith, 1979).

British, French, and German merchants trading on theWest African coast lobbied their respective governments,using chambers of commerce and members of their elect-ed legislatures, for annexations to reduce the risks andcosts in their dealings with African traders and rulers—problems that had increased because of a depression in theexport trade of oil-palm products to Europe (Hopkins,1973). For South Africa, it is necessary to explain why theBritish were willing to accept the independence of theBoer republics as late as 1881 (when the first war betweenthe British and Afrikaners ended because Prime MinisterGladstone declined to pursue what was essentially a localquarrel), yet fought a major war to conquer them in1899–1902. Economic hypotheses have centered on thediscovery of gold on the Witswatersrand in 1886. For ex-ample, it has been argued that British mining companiessought to engineer a British annexation because theyfeared that the Afrikaner authorities would put the inter-ests of Afrikaner farmers over those of British mine own-ers when it became a competition for African labor (Marksand Trapido, 1979, pp. 43–57; Porter, 1990, pp. 43–57).

In responding—selectively, albeit usually favorably inthis period—to calls for annexations from economic inter-est groups operating in the countries concerned, policymakers in the imperial capitals had broader political andeconomic considerations. The influence of the latter canbe seen in the role played by Joseph Chamberlain, theBritish colonial secretary from 1895 to 1903 and, there-fore, a key figure in the final phase of British annexationsin West Africa and in the origins of the South African War.

Chamberlain, who had himself been a screw manufactur-er, was to go on to champion the cause of commercial au-tarky for the British Empire. In office, he sought to extendthe “undeveloped estates” of the British Empire in Africaand elsewhere, not just to deny them to France or other ri-vals but to provide markets and investment opportunitiesfor British private investment. This was in anticipation ofa future in which Great Britain faced growing commercialcompetition from the industrial advances being made inGermany and the United States.

The most provocative and influential contribution ofrecent decades to the debate about the sources of Britishimperialism is P. J. Cain and A. G. Hopkins’s British Imperi-alism (1993). They argue that, throughout the whole historyof British overseas expansion, the decisive interest groupsbehind it were “gentlemanly capitalists,” concentrated inLondon and the “home counties.” Thus, not only was seven-teenth- and eighteenth-century British imperialism pushedby landowners and merchants, but they were also succeed-

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ed in this, not by the northern manufacturers associatedwith the industrial revolution, but by City of London finan-ciers. Cain and Hopkins’s analysis has attracted controver-sy, which shows no sign of diminishing (Dumett, 1999;Akita, forthcoming). What is now needed is a systematic ef-fort to place the British debate in a full comparative context.

Economic costs of empire. Economic gain, whetherfor the “metropolitan” economy as a whole or for a sec-tional interest with influence over policy, may be an aim ofempire. But the costs of acquiring and maintaining con-trol, and the capacity of the metropolitan economy to meetthose costs, are relevant to any analysis of the causes ofempire, even when the motivation for imperialism is polit-ical and cultural rather than economic. In this context, thefollowing observations should be made.

European capacity to create overseas empires—on ascale totally unprecedented in world history—was not in-variably or necessarily founded in an overwhelming eco-nomic superiority, which enabled them to meet costs thatwould have been prohibitive to others. At the base of Euro-pean imperial expansion were the advances in navigationand gunnery, which enabled small numbers of Portugueseships to dominate much of the Indian Ocean; guns andhorses, which assisted tiny numbers of Spanish to over-whelm the Aztec and Inca empires; and the numbers andquality of firearms that British and other European forcesbrought to bear around the world over several centuries,usually keeping ahead of efforts by their opponents tocatch up by imports and improvisation. The diseases thatthe Europeans brought with them also helped in the con-quest of the Americas. In the tropics, on the other hand,pathogens tended to raise rather than lower the net cost ofconquest, at least until (starting in the 1850s), the Euro-peans began to make use of quinine against malaria.

The material and human costs of maintaining politicalcontrol were a major determinant of the longevity of em-pire. In much of imperial history, European governmentsavoided many of these costs by leaving empire to private(or joint private-state) enterprise. The major form of thiswas the chartered company. Such arrangements lasted of-ten until the company concerned was unable to prevent orsuppress indigenous resistance, at least not without majorsubsidy and/or bad publicity to embarrass the imperialgovernment. The British East India Company was abol-ished by the British Parliament following the South AsianRevolt of 1857, and a similar fate befell chartered compa-nies in the German colonies in Africa.

Even when imperial governments assumed responsibili-ty over the territories concerned, it might be possible tosave money, again by delegation, but this time to indige-nous employees and authorities. Thus, in British WestAfrica, military and police forces were small and mainlyrecruited within the region, while lower-level judicial and

BRITISH EMPIRE. An 1887 advertisement for Pears’ Soap assuresBritish consumers “even if our invasion of the Soudan has donenothing else it has at any rate left the Arab something to puzzle hisfuzzy head over.” (The Fotomas Index, U.K.)

executive functions were delegated to African chiefs.When colonies were cheap, it was easier for the imperialpower to leave aside the issue of whether they made a netcontribution to the exchequer. Conversely, British Indiahad a major army, but the costs were borne by Indians, andits existence was considered a major military and politicalasset in Great Britain’s global profile. The other way to lim-it the costs of coercion was to avoid policies likely to pro-voke large-scale resistance. Thus, after 1857, the Britishgovernment of India followed a cautious policy in rural ar-eas, eschewing land reforms that might upset vested inter-ests (which officials believed to have been a cause of theuprising) and collecting land tax with a much lighter hand.

Finally, rising costs contributed to the end of empire af-ter 1945. For France in Indochina and Algeria, as for theNetherlands in what became Indonesia, the costs of waragainst armed independence movements became unsus-tainable. In Portugal, the costs of fighting liberation warsin its African colonies (including increasingly long periodsof conscription for young men) contributed greatly to therevolution that overthrew the dictatorship in Lisbon in1974. Costs were also relevant in the much more peacefulcontext of the British and French withdrawal from tropi-cal Africa. In the mid-1950s, both imperial governmentsconcluded that colonial rule was increasingly expensivebecause it was now politically essential—in the coloniesthemselves, in the imperial legislatures, and in the contextof Cold War competition—to be actively “developmental.”This was expected to entail heavy metropolitan invest-ments in infrastructure and education in the colonies.Both in London and Paris, such investments were no longerconsidered worth the likely return to the imperial economies(Cooper, 1996).

Economic Results of Empire for the Colonized. Theconsequences varied with the nature and context of theimperial relationship. Where imperialism involved demo-graphic displacement, indigenous populations generallyexperienced catastrophe: huge losses of lands and popula-tion and a long-term struggle to secure a share of the mod-ern economies that were eventually created in their old ter-ritories.

The early modern trading empires had mixed results, de-pending partly on the nature of the commodity. Despitethe monopolistic behavior of each European company,there was competition between (effectively) independentEuropean traders in the intra-Asian trade. For much of theeighteenth century especially, there was competition onthe West African coast and in the Indian Ocean betweenvarious European-chartered companies, while each com-pany faced independent European “interlopers.” Particu-larly, though not exclusively, where the Europeans’ tradingpartners—the merchants and rulers they dealt with inAfrica and Asia—remained politically independent during

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the period, those partners (and, indirectly, their partners’suppliers) could gain from the overseas markets to whichthe European merchants gave them access. Thus, Indiancloth was sold, for example, in West Africa and Mexico.African trading elites acquired revenue and importedtrade goods, even while African economies absorbed theexternal costs of commerce based on the capture and ex-port of people. In Asia, the Europeans had to pay for goodsmostly with bullion: the coins issued by the Mughal em-perors in the seventeenth century were made of Americansilver. The implication of this exchange was that the tradeenlarged the output and income of Indian producers with-out subjecting them to the competition that importedgoods would have represented (Prakash, 1998).

The impact of the informal imperialism of free trade wasagain limited to the extent that the countries affected re-mained politically sovereign. For Japan, the external chal-lenge acted as a wake-up call. For China, though the OpiumWars resulted in increased consumption of the drug, theBritish were foiled in that the Chinese market was soon sup-plied largely by import-substituting Chinese producers.

A broad contrast may be drawn between the neweconomies created in the territories in which Europeanshad largely displaced earlier populations and those coloniesthat remained mainly occupied by indigenous popula-tions. The distinction can be put in terms of the import offactors of production; of the material and technical meansto raise productivity by establishing new and higher pro-duction functions (new techniques, tools, and organisms);and of the institutional means for doing so, especially inthe form of changes in property rights in factors of produc-tion. Generally, the colonies—and their successor states—taken over by European immigrants had relatively highrates of import of capital and labor, the latter includingAfrican slaves, in the New World. A qualification should beentered for Spanish America, where the flow of bullion toSpain seems to have largely bypassed opportunities for in-vestment in colonial agriculture, at least until the late eigh-teenth century. Freed by the mid-nineteenth century frommercantilist restrictions, whether through the achieve-ment of independence, or by imperial reforms, the neweconomies went on to attract most of the capital thatflowed out of Europe, including during the golden era ofsuch investment (c. 1870–1914). The interrelated processof conquest, settlement, and trade led not only to the trans-fer of tools and techniques but also to extensive exchangeof animal and plant species between continents (Crosby,1986). On the whole, productivity in the “countries of re-cent European settlement” was boosted by these biologicalintroductions: Australia benefited from the sheep morethan it lost from the rabbit, for instance, while NativeAmericans as well as European settlers made effective useof the horse. More generally, by 1900 it was clear that, as a

result of some combination of these successful importa-tions, these economies had expanded greatly for the mostpart since the creation of the original colonies. The excep-tions were mainly in Latin America, but even thereArgentina was becoming one of the richest (per head)economies on earth, while by 1914 Brazil had a substantiallight-manufacturing sector.

European settlers and their descendants generallyadopted—and went on to change—rules of economic lifederived from a model in their native continent. In this con-text, differences between empires may be as important asthe shared experience of imperial rule. It has been arguedthat much of the economic success of North America is at-tributable to a favorable legacy of growth-conducive insti-tutions from Great Britain, especially individual propertyrights, defined and secured both at micro level and in con-stitutional law and political process. By contrast, the argu-ment continues, the institutional legacies of Latin Americawere less conducive to economic growth, and this ac-counts for the slower post-independence growth of theLatin American states. This view is plausible but surely in-sufficient. Alternative explanations relate not only to dif-ferences in factor endowment but also to the fiscal costs ofachieving independence: whereas the costs of the AmericanRevolution were borne partly by the French, the SouthAmerican republics had to pay all their own expenses, a bur-den that denied them the opportunity to emulate the UnitedStates in moving fairly swiftly into self-sustaining economicgrowth (Bernecker and Tobler, 1993; Coatsworth, 1998).

African and Asian colonies attracted relatively small in-flows of colonial capital and labor. India had only about 10percent of British overseas investment by 1913. Europeanagricultural techniques were tried, but in the tropics theyoften proved inefficient in the different climatic as well aseconomic conditions. Industrial-Revolution technologyenabled British firms not only to take over the overseasmarkets that European ships had previously opened to In-dian spinners and weavers but also to make great inroadsinto the domestic markets of handicraft industries in Asiaand Africa. On the other hand, European sea trade gaveAfrican and Asian farmers the chance to try Americanplants, such as the cocoa tree with the result that—prima-rily through indigenous enterprise—West Africans be-came the main cultivators of this Amazonian species. Insome colonies, notably in West Africa and Southeast Asia,export agriculture brought substantially higher—if fluctu-ating—real incomes to broad sections of the population.Even in industry, by 1914 Indian factory owners had takenover much of the market share that handicraft producershad lost to imported cloth. Colonial governments general-ly concentrated their investments on transport infrastruc-ture, notably railways. The effect was to encourage exportorientation in agriculture.

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At an imperial level, colonies were expected to specializein the production of primary commodities, and their ad-ministrations rarely did much to promote manufacturing.But some qualifications should be noted. A modern textileindustry developed in North Vietnam from 1894 (underFrench ownership), based on cheap labor and defended byFrench tariffs, while in the Dutch East Indies, textiles led avaried manufacturing sector (under European, Chinese,and American ownership) that emerged strongly, also be-hind a tariff wall, in the 1930s. Even the government ofBritish India became gradually more supportive of manu-facturing during its last fifty years, partly because of pres-sure from nationalists (as with the introduction of a provi-sion for “infant industry” protection in 1924). As of 1950,India was the tenth-largest producer of manufacturedgoods in the world. But Korea, under Japanese rule, wasthe only colony to have a substantial heavy industrial sec-tor built on its soil. Finally, Kaoru Sugihara links the ob-servation that the City of London “was a vital facilitator oftechnological transfer from the West to East Asia” withCain and Hopkins’s argument that British imperialism wasdriven by financial rather than industrial interests (Sugi-hara, forthcoming). This suggests an element of comple-mentarity between British economic imperialism and theindustrial development of Japan.

European institutions were much less widely adopted inthe colonies of predominantly indigenous habitation thanin those of mainly European settlement. In the earlydecades of British colonial rule east and south of theMediterranean, it seemed that Great Britain was deter-mined to refashion land tenure along British lines. In Ben-gal in 1793, Governor Cornwallis sought to create an Eng-lish-type structure of landlords and tenants, in which theformer would theoretically have an interest in encourag-ing improved methods of cultivation by the latter. Follow-ing the annexation of Lagos in 1861, the colonial govern-ment created individual titles in land to facilitate thecapital as well as land markets. But such institutional radi-calism was soon halted in India and West Africa: subse-quent British policy was more cautious and generallysought to preserve what the administrations defined as the“traditional” land tenure system. An exception was landsreserved for white settlers in certain colonies. Otherwise,during the colonial twentieth century, tendencies towardstronger individual rights in land tenure and to the buyingand selling of cultivation rights generally emanated frommarket forces or “informal” indigenous adaptations of ex-isting practices, rather than from formal colonial interven-tion.

Colonial regimes generally adopted a similarly cautiousapproach to the reform of labor institutions. Europe’s mer-cantilist empires in much of the New World had beenbased on slave plantations. When Europe partitioned

Africa, the imperial powers committed themselves to abol-ishing slavery wherever they found it. Yet in practice, colo-nial governments usually took years or even decades be-fore effectively prohibiting the various forms of slaveryand debt bondage that they encountered south of theSahara.

This widespread reluctance of colonial regimes to im-pose contemporary European models of land and laborlaw on African and Asian societies stemmed partly frombudget constraints: lack of revenue to pay for compulsoryland titling or compensate owners of freed slaves. Butmore fundamentally, colonial administrators tended toput maintaining social order ahead of reform. Individualownership of land and individual ownership of their ownlabor power could result in a breakdown of social control,as poor peasants lost their land through debt or sale,and/or as former slaves left their masters for an uncertainwage-labor market. When colonial governments encour-aged wage labor, mainly for European employers (mines,plantations, or settler farms), it was usually in the halfwayform of seasonal migration rather than full-scale depend-ence on the market. Yet by the end of colonial rule, Marx’s“modernizing” view of capitalist imperialism had come atleast half true. Partly in response to changes in demand forfactors of production rather than because of colonial poli-cies on land and labor as such, land tenure was often morecommercialized, while labor was recruited from outsidethe family more often than before and, above all, was ob-tained on relatively free markets.

Economic Results of Empire for the Colonizers. It isquestionable whether the possession of empire con-tributed to economic growth or structural development inthe early modern era (to c. 1815). Spanish miners, ship-pers, and the monarchy and its payroll all benefited in realterms. But the orientation of imperial commerce towardthe annual shipment of bullion to Spain was at the cost ofinflation—transmitted throughout Europe but highest inSpain—and was associated with (though did not directlyor sufficiently cause) lagging industrial expansion inSpain. Even in the Dutch economy, whose relatively ad-vanced market orientation equipped it to take advantageof a trade-based empire, commercial expansion was notconverted into sustained development of manufacturing.For France, the overseas adventures of the early modernera contributed greatly to the fiscal burden, which helpedbring the ancien régime to crisis.

Great Britain was, arguably, the one early modern Euro-pean economy to derive sizable net gains from empire, andit was the one with by far the largest trade with other conti-nents. Yet, the importance of these gains has been muchdisputed. Patrick O’Brien argued that such commercemade a quantitatively insignificant contribution to thereinvestable surplus even of Great Britain, let alone of

8 ECONOMIC IMPERIALISM

western Europe generally (O’Brien, 1982; compare Waller-stein, 1983). Meanwhile, research on the genesis of thatrevolution has emphasized domestic sources of invest-ment and the importance of domestic and Europeanmarkets, rather than colonial trade. Clearly, possession ofan overseas empire was unnecessary for an industrialrevolution, as was demonstrated by nineteenth-centuryGermany. Neither was it sufficient, as was demonstratedby the slow economic development of Portugal and Spainafter their acquisition of empires.

Recently, Kenneth Pomeranz (2000) has reemphasizedthe importance of empire to the eighteenth-century Britisheconomy. He argues that what finally enabled GreatBritain (and, by extension, the West as a whole during thenineteenth century) to industrialize when China did notwas that whereas Chinese growth ran into diminishing re-turns caused by a shortage of land and fuel, the Britishtook advantage not only of their own coal but of the avail-ability—thanks to colonialism—of North American natu-ral resources. Thus, if the British economy escaped an eco-logical bottleneck, an essential contribution was made bycheap fuel and food from across the Atlantic, as well as bycheaper raw material for textiles, thanks to the combina-tion of American land and African slaves.

The contribution of formal colonialism without demo-graphic takeover to the “metropolitan” economies hasbeen similarly controversial. The Dutch economy derivedmajor benefit from its territorial empire in the nineteenthcentury following the establishment, from around 1830, ofthe Cultivation System, under which Javanese were forcedto grow selected export crops on a large scale. In the hey-day of the system, the 1850s and 1860s, the financial sur-plus from the Dutch East Indies constituted more than 30percent of Dutch public revenue; but the system was dis-mantled during the late nineteenth century under domes-tic criticism (Brown, 1997). The French economy appearsto have benefited, though relatively modestly, fromcolonies in Algeria and Indochina, though not necessarilyfrom France’s sub-Saharan possessions before 1945. ThePortuguese economy arguably obtained net gains in the1930s–1950s from more systematic exploitation under theSalazar regime—before the gains were swallowed by thecosts of fighting independence movements. Part of theproblem for European empires is said to have been thatpossession of “captive” markets deflected metropolitanfirms from the central task of adapting to remain competi-tive with the new industrial leaders, including those withrelatively minimal colonial empires—the United Statesand Germany.

That thesis would seem least applicable to the largestempire, the British, because of the British commitment tofree trade until 1931. Even so, the fullest quantitative bal-ance sheet of the British empire concluded that the British

economy was the poorer for empire, though privateinvestors, especially those from London and from the so-cial elite, were the richer (Davis and Huttenback, 1986;compare O’Brien and Prados de la Escosura, 1999). Davisand Huttenback’s analysis has been strongly disputed:their finding of a net loss depends, for instance, on theproblematic issue of how much the defense of Canada costthe British treasury. If the calculation were redone to allowfor Canadian and other overseas imperial contributions tothe British war efforts from 1914 to 1918 and from 1939 to1945, the overall picture could look different (Offer, 1993).

Ironically, Great Britain’s colonies in tropical Africamade their most valuable contributions to the imperialcurrent account within what turned out to be the lasttwenty years of colonial rule, as commodities such as WestAfrican cocoa earned dollars that the metropolitan econo-my desperately needed. Malayan rubber was of diminish-ing importance in this respect in the late 1940s, as U.S.purchases of natural rubber declined. Crucially, there wasa broader trend in the mid-twentieth century, rooted inchanges within the Western economies, for Europeancountries to trade even more among themselves and withother industrialized economies, while commercial linkswith remaining or recent colonies relatively declined(Marseille, 1984; Lipietz, 1983).

Conclusion. Since the virtual end of formal overseasempires around 1960, much necessary revisionism hastaken place: discrediting some of the earlier analyses ofeconomic motivation for empire and developing new ormore refined ones; attempting to quantify the gains andlosses to the metropolitan economies; and reshaping thecontext in which European imperial history should beunderstood—by showing that the world on which Europeburst out in the fifteenth to eighteenth centuries was byno means uniformly backward economically and by re-vealing the previously understated extent of indigenouseconomic initiatives within certain African and Asiancolonies in the nineteenth and twentieth centuries. Thisessay has sought to illustrate the variety of historical ex-perience and of available interpretation. It is appropriateto end by underlining the importance of the topic in a dif-ferent context. Much of the history of global economic in-tegration, including the reduction of transaction coststhat provided the framework for price convergence ingoods and eventually in factor markets, has been the his-tory of imperialism. In principle, the results of empiremight be distinguished from those of peaceful migrationand trade: but the distinction is meaningless when con-quest was a precondition of foreign settlement, or formercantilism, or where free trade was imposed by foreignguns. That the populations of Australasia and the Americ-as speak European languages would not have happenedwithout the violent seizure of overseas territory. Empire

10 ECONOMIC IMPERIALISM

has been central to both the fact and the form of integra-tion in the global economy during the last five hundredyears.

[See also Economic Development; Geographical Expan-sion; International Migration; and Settler Economies.]

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Mommsen, Wolfgang J., and Jürgen Osterhammel, eds. Imperialismand After: Continuities and Discontinuities. London, 1986. Geo-graphically wide-ranging essays, focused on nineteenth and twenti-eth centuries.

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GARETH AUSTIN